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Broad-based group formed to tackle AOB fraud

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The group, of which FAIA is a member, is calling for a legislative fix to the growing problem 

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A broad-based group of business leaders and consumer advocates has formed the Consumer Protection Coalition to push for reforms to end Assignment of Benefits (AOB) abuse.

The group launched a website this week, FightFraud.Today, that includes an online petition consumers can sign to urge lawmakers to pass meaningful AOB reform, as well as consumer-friendly education materials detailing the AOB scheme.

‘’Assignment of Benefits abuse is a huge threat to Florida’s families and businesses and must be stopped,’’ said Mark Wilson, president and CEO of the Florida Chamber of Commerce, which is leading the coalition. “Billboard trial lawyers and questionable vendors are taking advantage of AOB to essentially steal money from consumers and wreak havoc on our state’s insurance market. For the sake of attracting new businesses and jobs, we can’t let that happen.’’

The coalition is concerned about the impact of AOB abuse on the state’s consumers, insurance costs, and overall business climate, and supports AOB legislation filed by state Sen. Dorothy Hukill (SB 596) and Rep. Matt Caldwell (HB 1097).

AOB is a legal tool that allows policyholders to sign over their insurance benefits to a third party, such as a home repair vendor, without having to pay money up front to cover repair work. While AOB can be useful in processing claims promptly, a cottage industry of trial lawyers, unregulated water extraction firms and other vendors have increasingly used AOB to take complete control of homeowners’ policies, then inflate the costs of repairs and file costly lawsuits against property insurers. These suits are often filed without the knowledge or consent of the homeowner.

Coalition members advocate that consumers don’t need to sign an Assignment of Benefit to handle insurance claims for emergency repair work. They can simply direct their insurance company to pay vendors and, if they don’t feel like their claim was handled properly, they can take action against their insurer.

(See FAIA's AOB FAQ for consumer tips)

“Homeowners should not be asked to sign away their rights simply to get needed home repairs. A practice that depends on consumers skimming quickly over the fine print and unknowingly signing their rights away is a recipe for exploitation, fraud and manipulation,” said Jennifer West, executive director of the Consumer Federation of the Southeast, which is a member of the coalition. “The state of Florida should do everything it can to protect homeowners from Assignment of Benefits abuse.”

Inflated claims and lawsuits involving AOB have forced premiums to go up for consumers in South Florida and, if left unchecked, could result in a full-scale consumer crisis that increases rates statewide. After a decade without a hurricane, Florida should be benefiting from reduced rates—not higher ones— and focusing on protecting against the next major storm.

Assignment of Benefits abuse has become widespread in South Florida and is quickly spreading. Statewide, the number of AOB lawsuits has grown from 9,424 in 2005 and 2006 to 92,521 in 2013 and 2014. In fact, state-run Citizens Property Insurance Corp. was recently forced to raise insurance premiums more than 8 percent in areas of South Florida because of the steep rise in lawsuits stemming from non-weather-related water damage claims. Citizens said dubious water damage claims and AOB lawsuits were the single reason why rates went up in Miami-Dade County, where water loss claims now account for more than half of every premium dollar collected. Otherwise, nearly all of the policyholders would have seen a rate decrease.

“Every honest contractor in the state of Florida should be concerned about Assignment of Benefits abuse and its impact on the insurance market,’’ said Cam Fentriss, a representative for the Florida Roofing and Sheet Metal Contractors Association. “Contractors don’t need an AOB to get paid by insurance companies, and anyone who pressures homeowners into signing one gives a black eye to our entire industry of hardworking professionals. We fully support reforming AOB.’’

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